New US Tariffs on Thailand May Hurt Export Competitiveness, Economic Growth

Asia Plus Securities (ASPS) has warned that a new US tariff of 12.5% imposed on Thailand could weaken export competitiveness and add pressure to economic growth in the second half of the year. The rate is higher than the 10% levy imposed on regional peers like the Philippines and Malaysia, raising concerns over Thailand's export growth. Therdsak Taveeteeratham, executive vice-president at ASPS, noted that uncertainty is growing for the export sector following the US introduction of new tariffs under its Section 301 trade measures. "The higher tariff burden could erode Thailand's competitive position in key export markets and slow export growth during the second half of the year," he said. Furthermore, ASPS analyses suggest that Thailand's expanding trade surplus with the US increases the risk of additional US trade moves. "Thailand's increasing trade surplus with the US requires vigilance for potential 'excess production' tariffs from the US, which could pressure the shipment sector," the brokerage noted. ASPS advises investors to monitor potential tariffs targeting products linked to excess industrial capacity, which Washington has yet to announce, as this could create further headwinds for Thailand's export-driven economy. The sectors most exposed to the new tariff are pet food, processed food, beverages, and electronics. However, several major export categories were exempted, including oil, natural gas, and fertilizer products, which the US imports in large volumes. This provides relief for energy companies such as PTT, PTT Exploration and Production (PTTEP), Thai Oil (TOP), IRPC, and Bangchak Corporation (BCP). Products already covered under Section 232, including automobiles, steel, aluminum, and copper, are also excluded from the latest tariff measures, benefiting steel processors and pipe manufacturers. According to the Commerce Ministry, Thai exports surged 20.8% year-on-year in June, exceeding market consensus, while imports jumped 50.3%, resulting in a trade deficit of US$6.57 billion. Several export categories continued to post solid gains, including pet food (up 22.3%), rubber (up 12.5%), and processed chicken (up 6.1%). KGI Securities (Thailand) also cautioned investors to monitor the latest US tariffs related to Section 301, given Thailand's high dependence on the US market, which accounts for 26.3% of total exports. Electronics exports surged 66% year-on-year in June, with the "other electronics" segment skyrocketing 118%, potentially driven by technological adoption and the impact of relocation due to geopolitical risks.